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Pursuant to a congressional request, GAO reviewed the status of the Theater High Altitude Area Defense (THAAD) program, focusing on: (1) the underlying problems in the program that led to test failures; (2) whether program restructuring efforts address these underlying problems; and (3) how this restructuring will affect THAAD's User Operational Evaluation System.

GAO noted that: (1) the program's compressed flight-test schedule did not allow for adequate ground testing; (2) the requirement to be able to quickly deploy an early prototype system diverted the contractor and government project management's attention away from the normal interceptor development process and resulted in interceptors that were not equipped with sufficient instruments to provide optimum test data; (3) quality assurance received insufficient emphasis and resources during the time of component production; (4) the contract for developing the interceptor was a cost-plus-fixed-fee contract, a contract type that placed all of the program's financial risk on the government and did not include provisions that could be used to hold the contractor accountable for less than optimum performance; (5) flight-test failures have been caused primarily by manufacturing defects rather than problems with advanced technology; (6) these failures have prevented the Army from demonstrating that it can reliably employ the hit-to-kill technology critical to THAAD's success; (7) the restructured program addresses each of the program's four underlying problems: (a) it lengthens the flight-test schedule and increases ground testing; (b) removes the requirement for the deployable, early prototype interceptors; (c) increases the contractor's quality emphasis, including its commitment, leadership, and quality assurance staffing; and (d) modifies the cost-plus-fixed-fee contract to provide performance-based incentives and penalties and introduces a degree of competition into the program; (8) despite these changes, the reliability of the remaining flight-test interceptors remains a concern because most components were produced when the contractor's quality assurance system was inadequate; (9) the program restructuring puts into question the need to retain a fully staffed User Operational Evaluation System battalion; (10) the battalion will have little or no capability to intercept ballistic missiles because interceptors will not be available for the prototype system unless interceptors intended for tests are diverted to the battalion; and (11) according to the Army Training and Doctrine Command's system manager for THAAD, the THAAD radar could be used for predicting the launch and impact points of enemy missiles, but no requirement exists for THAAD to perform that mission and no independent assessment of the prototype radar's capabilities is planned.

Recommendation for Executive Action

Status: Closed - Implemented

Comments: In June 1999, GAO reported that the restructured Theater High Altitude Area Defense (THAAD) program does not include prototype interceptors intended for deployment in a national emergency. GAO also reported that this raises the issue of what the purpose of the 295-man THAAD UOES battery at Fort Bliss, Texas should now be. Following the report, the Ballistic Missile Defense Organization and the Army reassessed the potential capabilities of the THAAD UOES. According to DOD, that assessment led to the decision not to pursue THAAD UOES contingency capabilities. Because one of the residual THAAD UOES radars was now available for alternative use, it was provided to the National Missile Defense program so that its components could be used as spares for the National Missile Defense (NMD) program's prototype ground based radar. The NMD program office estimates that the cost avoidance associated with this use of the THAAD UOES radar $28.5 million in fiscal year 2001 and $2.7 million each year for fiscal years 2002 through 2007. Therefore, GAO is claiming a monetary accomplishment of $32.539 million based on the present value calculation.

Recommendation: The Secretary of Defense should determine and define which, if any, potential capabilities of the restructured THAAD User Operational Evaluation System are needed by the warfighter community. If warranted by that determination, the Secretary should: (1) direct that an independent operational assessment of the needed THAAD User Operational Evaluation System capabilities be conducted; and (2) require the Army to determine the minimum essential military personnel and equipment required to fulfill the defined mission.